African Raw Materials and India’s Quest for Great Power Status

Africa’s raw materials and markets will be indispensable for the realization of her geopolitical ambitions.

By Khaled Almanzlawiy for The Diplomat

October 17, 2016

According to some estimates, by 2030 middle class consumption — a major driving force in the global economy — will grow dramatically in China, India, and other Asian countries. African resources will undoubtedly fuel part of that consumption. The Indian government’s drive to raise the country’s growth rates for the well-being of the people and for the fulfillment of the country’s geopolitical ambitions (i.e. to turn India into a world power) therefore hinges to some extent on greater access to African raw materials and markets.

But in this drive, India will have to contend with other global powers which are now the main economic players in Africa. The main challenge comes from China, which has been present on the continent longer than has India, and is now Africa’s largest trading partner. Africa is now the largest source of China’s imports.

Specifically, both the volume of China’s trade with African states and her investments in the continent dwarf India’s. Statistics for 2015 show that China’s volume of African trade is more than three times India’s (that is $220 billion versus $70 billion), and that China’s investments in Africa are six times larger than India’s ($180 billion versus $30 billion). China has also provided one sixth of the external infrastructure financing for the continent, and its contribution to this sector seems to be growing.

In the pursuit of her goals in Africa, India is therefore at a disadvantage. India lacks China’s resources, and the contacts that China has developed in Africa over the past two decades. However, India has some assets of its own, and ones that should allow New Delhi to narrow the gap with China, and with the other global powers active in Africa. India has traditionally had stronger ties with African states owing to the struggle against colonialism they all have shared, to India’s support for African liberation movements, and to the identity that India and African states previously shared as non-aligned countries. Furthermore, India has also a large expatriate community in Africa, which is an asset for India’s goals in Africa.

India must follow a multi-pronged strategy in order to secure greater access to African raw materials and markets, which are necessary for her economic and geostrategic goals. The main component of this strategy calls for India to play to her strength, through a projection of soft power. This involves sharing knowledge and technology with African states, in a win-win partnership with them. Development assistance is also a component of this soft power strategy. Under Indian Prime Minister Narendra Modi’s leadership, India has increased that assistance to $5.4 billion.

The other component of this strategy calls for broadening the base of partnership beyond traditional main trading partners, to include other rich and influential countries in the continent. Algeria, South Africa and Nigeria are the key players in the New Partnership for Africa’s Development (NEPAD), the planning and coordinating technical body of the African Union (AU), whose aim is to eradicate poverty and create sustainable growth in Africa. These states are also the most influential actors within the AU, and the closest allies in the continent. India should not concede the important Algerian market to China (which accounted for $8.2 billion in Chinese exports in 2014, making Algeria China’s main trading partner in Africa), and should make the three African heavyweights a linchpin of its African strategy. This strategy is all the more important because the Trans-Sahara Highway will soon link Algeria to Nigeria and to other states along Africa’s Atlantic coast, bringing significant economic benefits both to the local economies of the countries through which it passes, and to the powers that will take advantage of this golden opportunity.

The third component of the Indian strategy of making Africa’s raw materials and markets indispensable tools for India’s economic growth and for the realization of India’s geopolitical ambitions requires providing multiform assistance to Indian companies and individual investors to help them compete with their Chinese counterparts, who have received a strong backing from Beijing. Given India’s limited resources, priority should be given to Indian companies active in sectors of strategic importance (e.g. energy); those which are key players in the economies of the host countries; and, finally, those which are important for India’s African partners (e.g. IT firms).

The final component of the Indian strategy requires creating a positive environment for African partners, who may need technical or financial assistance from India. There have been complaints, for instance, that, unlike the Chinese, India rarely delivers lines of credit on time. It is therefore imperative that India delivers on the promises she made during the Third India-Africa Forum Summit of 2015 to set up a joint monitoring mechanism to ensure implementations of Indian projects in Africa.

It is also imperative, in light of the criticism of the way Chinese firms are doing business in Africa, that Indian firms operating there not be perceived as behaving arrogantly toward Africans, as exploiting them, pillaging their resources, or as having poor safety and environmental standards. India cannot sell Africans the idea of setting up a win-win partnership with them and have firms in Africa engage in behaviors that undermine this very principle.

India’s commitment to a win-win partnership with African states is currently reflected in the Indian government’s decision to almost double the number of scholarships to African students. However, this effort will come to naught if the 50,000 students return to their countries with a negative experience in India. Steps should therefore be taken to ensure that this scenario does not come to pass, and that African students will, instead, become goodwill ambassadors for India upon their return home.

India therefore should be able to play a role in Africa that is commensurate with her ambition of becoming a world power by 2050. Africa has the strategic raw materials and the markets to make that ambition a reality. The dynamism of African economies, and the huge potential of growth there, including in the agricultural sector (31 percent of the world’s unused arable land) should make Africa a strategic priority for India for the coming decades. If India replicates the impressive growth of the volume of her trade with African states achieved between 2008 and 2015 ( a 48 percent increase) in the next seven years, she will succeed in narrowing the gap with the other powers active in Africa, notably China.

Kaled Almanzlawiy is a Mason Fellow at Harvard University’s John F. Kennedy School of Government.